Concerns Over Private Firm Managing Some NYCHA Properties

The East 120th Street Rehab property, with 42 apartments and 92 residents, is one of six Section 8-funded NYCHA properties that the authority has hired an outside firm to manage.

Outgoing Mayor Michael Bloomberg’s administration recently announced that its plan to lease parts of eight NYCHA housing projects to private developers is on hold pending the arrival of the new mayor.

But the Bloomberg administration’s push to involve the private sector in public housing is not limited to the city’s traditional public housing projects. City Limits has unearthed a request for proposals issued by NYCHA in June to turn over management responsibilities—including maintenance, rehabilitation—of 874 city-owned Section 8 apartments spread throughout buildings in six developments in the Bronx, Brooklyn and Manhattan to a private development corporation.

The six developments in question are Bronxchester at 510-522 E. 156th Street, Campos Plaza 1 at East 13th Street and Avenue C on Manhattan’s Lower East Side, Milbank-Frawley at 4-20 E. 117th Street and 1772-1780 Madison Avenue in East Harlem, Saratoga Square in Brooklyn, the East 120th Street Rehab and the East 4th Street Rehab.

Traditional public housing uses federal subsidies to operate publicly owned buildings. Section 8 pays a portion of a tenant’s rent, usually in privately owned buildings. These six buildings are a hybrid: owned by NYCHA but using Section 8 to cover the gap between what tenants can afford to pay and what building operations cost.

In early November, NYCHA issued a press release announcing the award of the contract to RDC Development Corporation, a private firm that NYCHA claims currently manages thousands of affordable housing units throughout New York City. RDC Development Corporation is a joint venture between Wavecrest Management and MDG Design + Construction.

Wavecrest Management runs other affordable housing complexes in the city, including two Archdiocese-owned developments on the Lower East Side and in Chinatown, Haven Plaza and the Grand Street Guild. MDG Design + Management worked on the Haven Plaza and Grand Street Guild projects with Wavecrest management. Wavecrest Management and Wavecrest Equities LLC (the firm’s finance branch) are currently facing a federal civil suit that alleges workers were underpaid for construction work at the Haven Street building.

The value of the contract has not been publicly announced nor has the time period it will cover, but the RFP suggests a period of 30 years.

Sheila Stainback, a spokesperson for NYCHA, says the contract will not displace tenants or change their status. “This allows us to secure funding for facility repairs,” Stainback says, which will be performed in-place. The funding, Stainback said, would come from the yet-undisclosed developers fee that will be paid to NYCHA for the RFP award.

While the involvement of private management companies is not new, this deal comes at a time when City Hall is changing hands, public housing faces steep financial challenges and the current NYCHA leadership has faced criticism over its handling of repair issues.

The NYCHA proposal was greeted by concern from some affordable housing advocates, who are suspicious of the increased involvement by for-profit concerns. Monique Georges, a housing advocate with Community Voices Heard who was raised in public housing, said there needs to be greater oversight of how NYCHA manages the affordable housing units under its control, particularly as it continues to deepen its relationship with the private sector. “Nobody’s been holding NYCHA accountable,” says Georges.

Public Advocate-elect Letitia James, who was one of the most outspoken advocates for affordable housing during her eight years on the City Council, said she was dismayed at the proposal to place a private, for-profit company in charge of affordable housing and hoped Rhea would hold off on signing the contract until Mayor-elect Bill de Blasio had a chance to weigh in on the deal.

James vowed to use her new office to review the RFP and contract with the assistance of the Legal Aid Society, and mentioned the possibility of litigation to halt the deal’s progress.

“I’ve called for more oversight and further review of these transactions,” James says. “We’ve lost so much ground under Mayor Bloomberg and we can’t afford to lose any more affordable housing.”

Despite NYCHA’s assertions that current residents would not be displaced by this project, James says she would rather have a more detailed discussion in the public setting. “I’d rather shed some sunshine on this management agreement and have an independent set of eyes—either the City Council, or the attorneys on my staff—review the transactions,” James adds, noting that she expects the Council’s housing committee to expedite a hearing on the NYCHA contract.

Rosie Mendez, the outgoing chair of the City Council’s public housing committee, got wind of the NYCHA proposal last summer when a contractor approached her for a letter of recommendation with regard to the RFP.

“This decision on their part to have their Section 8 properties managed and put out to RFP was never brought out to the Council by the housing authority,” Mendez says. She was not entirely opposed to involving private companies in managing Section 8 housing, given diminishing federal funds for public housing. However, Mendez noted that some of the developments, like Campos Plaza, will now be split between buildings that are privately managed and buildings that are still under NYCHA management – which she believes will pose problems for tenant associations. “To split them up now into two different management categories is problematic,” Mendez says, adding that the change will “weaken tenant associations and create real problems with two different tracks of housing.”

Mendez knows of RDC Development’s prior work as Wavecrest LLC on Haven Plaza, which she said was a “nightmare” rehab that is still causing headaches for residents. Although Mendez is the outgoing chair of the housing committee whose successor will be appointed in February, she believes the contract award merits a hearing, particularly around the lack of public notice and discourse, as well as attention from the incoming mayor.

“We will see what the mayor’s office on contracts ends up doing in terms of vetting this company, RDC, with the federal lawsuit that was filed against it,” Mendez says.

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